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Equity funds to close year strong, analysts predict
Equity funds are likely to lead the country’s mutual fund market over the next two months as share prices are estimated to continue to strengthen until the end of the year, analysts say.
The improvement in economic indicators, analysts said, included the expected decline in inflation, as well as non-fundamental factors such as year-end window dressing by fund managers and expectations that interim dividends would further bolster share prices.
With such encouraging factors, Praska Putrantyo, an analyst with PT Infovesta Utama, estimated that until the end of 2013 equity funds would likely provide higher returns than other types of mutual fund.
Data from Infovesta, a capital market research and consulting company, shows equity funds index posted a monthly increase of 4.65 percent in October, slightly higher than the rise experienced by the Jakarta Composite Index (JCI), which gained 4.51 percent during the month.
The balanced fund index booked a 3.78 percent positive movement; fixed income fund index, 3.59 percent; government bond index, 2.78 percent; and corporate bond index, 0.72 percent.
According to data provided by the Financial Services Authority (OJK), equity funds totaled Rp 84.88 trillion (US$7.34 billion) as of Oct. 31, about 40 percent of all mutual funds.
The total assets under management continued to show an upward trend in October after posting drops in the previous three months. The improving situation in the domestic stock market in October was reflected by a 4.51 percent increase in the JCI, which contributed to the recovery of the mutual fund market.
According to data from OJK, total assets under management grew by 16.3 percent in October from the previous month with 774 mutual funds and 119.16 billion outstanding investment units. In September, there were 759 mutual funds and 119.68 billion outstanding investment units.
“The improved performance of mutual funds in October was supported by rising stock and bond prices,” Praska said last week.
Budi Budar, senior portfolio manager with PT Samuel Aset Manajemen, said assets managed by his company were up 4.7 percent in October to Rp 2.69 trillion mainly because of the increase in the value of equity funds.
The increasing number of investors, he added, also contributed to the firm’s assets under management.
Praska said a number of global issues, including the postponement of the Federal Reserve’s tapering and the end of the US government shutdown, were behind the positive share price outlook.
These issues have encouraged foreign funds to return to the Indonesian equity and debt markets. “As of the end of October, foreign ownership in government bonds was Rp 318 trillion,” he added.
There were massive outflows of foreign funds from the Indonesian market between July and September due to rising concerns that the Fed would reduce its stimulus program.
Infovesta data shows the decline in the number of mutual funds in October was due to the redemption of many mixed- and money-market mutual fund products as well as several protected funds maturing. (fey) The Jakarta Post
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